Thursday, May 14–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Traders and investors continue to assess and reassess the Covid-19 situation as it pertains to global, national and local economies. Human nature appears to be competing more and more with continued warnings from health experts–meaning people that have been cooped up for two months desperately want to get out and resume more normal lives, even though the pandemic is far from being under control and no vaccine is on the horizon.
The U.S. trading session will see the weekly jobless claims released, with the latest reading expected to show new claims of around 2.5 million. If that figure is realized, it would still be markedly down from weekly jobless numbers seen recently.
The marketplace takeaways so far this week include a growing number of economists now projecting longer recovery periods for major world economies, highlighted by Federal Reserve Chairman Jerome Powell Wednesday providing a grim picture of the U.S. economy and its path out of the pandemic. The other takeaway is a strong rebound in stock markets despite many main street businesses remaining shuttered and large segments of populations still in quarantine. How long can this juxtaposition last?
U.S.-China relations remain close to the front burner of the marketplace. The U.S. this week has accused China of hacking U.S. firms working on a Covid-19 vaccine. Given the already strained relations between the world’s two largest economies, it’s hard to imagine they will emerge from the current health crisis without profound and permanent changes in their relationship, including supply chains.
The important outside markets see Nymex crude oil futures higher early today and trading around $26.50 a barrel. The International Energy Agency Thursday said global oil demand in May will drop by 21.5 million barrels—outstripping the recent supply reductions. The U.S. dollar index is firmer today. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.61%.
Other U.S. economic reports out Wednesday include import and export prices. Several Federal Reserve officials are scheduled to give speeches today.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly down in early U.S. trading. Bulls have this week lost their slight near-term technical advantage amid a near-term uptrend that has stalled out. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 2,876.75 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 2,786.00 and then at the May low of 2,771.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are near steady in early U.S. trading. A price uptrend is in place on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 9,202.75 and then at this week’s high of 9,345.00. On the downside, shorter-term support is seen at the overnight low of 8,943.25 and then at this week’s low of 8,878.25. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly up in early U.S. trading. Bulls have the overall technical advantage amid recent choppy trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 182 even and then at 182 16/32. Shorter-term support lies at 181 even and then at the overnight low of 180 12/32. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage but trading has been sideways and choppy at higher levels for weeks. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at 139.16.0 and then at 139.22.0. Shorter-term technical support lies at the overnight low of 139.05.0 and then at 139.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the overall near-term technical advantage but trading has been sideways and choppy recently. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 100.510 and then at 100.975. Shorter-term support is seen at 100.00 and then at this week’s low of 99.585. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher and hit a four-week high in early U.S. trading. It strongly appears a market bottom is in place and prices are starting to trend up. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $27.00 and then at $28.00. Look for sell stops just below technical support at the overnight low of $25.18 and then at this week’s low of $23.67. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are weaker in early U.S. pre-market trading. Traders will focus on Thursday morning’s weekly USDA export sales report. The deteriorating U.S.-China relations recently are bearish for the grains. Also, the U.S. corn and soybean crops are being planted at a rapid pace amid generally good weather. Grain bears remain in overall technical control, even though market bottoms appear to be in place.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS.
Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff